Subhiksha defaults on PF dues, board members exit
By siliconindia   |   Wednesday, 18 February 2009, 18:17 IST
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Subhiksha defaults on PF dues, board members exit
Chennai: The trailers of Subhiksha's cashless saga have unveiled more complications with the company now being scanned for its provident fund defaults and board members quitting to avoid the ongoing commotion. The Employees' Provident Fund Office (EPFO) in Chennai has plans to annex the properties of the firm as it failed to deposit provident funds since June 2008, of around 4,500 employees which amounts to five crore rupees. Representatives of ICICI Venture CEO and Managing Director Renuka Ramnath and joint Managing Director Rajeev Bakshi , who holds 23 percent in the retail chain and management consultant Rama Bijapurkar, have quit the board. "The Companies Act imposes a lot of penal obligations on board members even for mistakes committed due to inability rather than intent to default - such as, non-payment of salaries and dishonoring of cheques. The resignations of the directors can only be related to that as they do not want to get entangled in such issues. All resignations have stated personal reasons which we believe would be an attempt to avoid penal legal liability," R Subramanian, Promoter and Managing Director, Subhiksha, told The Economic Times. An EPFO official noted that Subramanian claimed that the company employed 10,000 people, excluding 5,500 contract workers. "If the department finds that the contractors have also defaulted on provident fund payment, Subhiksha will be held responsible since the company is the principal employer," the official told Business Standard. But annexing company's bank accounts would be of no use as it does not have any balance in the banks. Subhiksha is already in the midst of a financial crisis and is currently in talks with banks and financial institutions to restructure loans worth 700 crore.

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